Brand Mock 2 - 2024/25

Question 1

People’s confidence in long-term financial arrangements is sometimes undermined by

A. interest rates.
B. inflation.
C. economic instability.
D. taxation.

Answer 1

B

Question 2

Improving trends in mortality mean that the biggest concern for many people’s retirement planning is

A. the rise in morbidity rates.
B. the increasing number of people with cancer.
C. dying prematurely.
D. living longer than expected.

Answer 2

D

Question 3

Morag is considering a policy that would enable her to maintain her mortgage payments if she was made redundant. She should be aware that such policies

A. may reduce the amount of cover available by the amount of any savings she has.
B. could prevent her applying for any State benefits.
C. can provide any amount of benefit she wants to have.
D. will only provide benefits for a maximum of two years.

Answer 3

D

Question 4

James makes a lifetime gift into a trust which is not an absolute/bare or disabled trust. How much tax is due immediately? Assume no annual exemptions are available

A. 20% on the amount gifted into trust.
B. 20% on the amount gifted into trust that exceeds the available nil rate band.
C. 40% on the amount gifted into trust that exceeds the available nil rate band.
D. 40% on the amount gifted into trust.

Answer 4

B

Question 5

Where a business is considering protection for one of its employees, the need will depend on the individual employee’s

A. role in the business.
B. age.
C. salary.
D. length of service.

Answer 5

A

Question 6

What is the correct position with regards to taxation of, and eligibility for, the
personal independence payment?

A. It is a taxable benefit.
B. It is a means-tested benefit.
C. Eligibility is based on an assessment of individual need.
D. Eligibility is based on the claimant’s National Insurance contribution history.

Answer 6

C

Question 7

In relation to the State pension credit, an individual reaching State pension age on or after 6 April 2016 may normally be entitled to

A. the guarantee credit only.
B. the savings credit only.
C. both the guarantee and the savings credit.
D. neither the guarantee nor the savings credit.

Answer 7

A

Question 8

Mark and Joanne are making a claim in November 2024 for child tax credit having had their first child in June 2024. Their claim can be backdated to the

A. start of the 2024/25 tax year.
B. date of birth of their child.
C. start of the month following the birth of their child.
D. month before only.

Answer 8

D

Question 9

Phil and Athina are looking at taking out a decreasing term assurance. With regard to this type of policy, they should be aware that

A. premiums will often be payable for a period slightly longer than the duration of the cover.
B. escalating payments are available on a family income benefit policy.
C. mortgage protection insurance is suitable for protecting interest-only mortgages.
D. gift inter vivos term assurance is appropriate to protect against the IHT potentially payable on an estate on death.

Answer 9

B

Question 10

What is the CORRECT definition of the pure or net premium calculated for life assurance policies by actuaries from mortality tables?
A. The premium required just to meet the claims of those who die during the year.
B. The actual premium that will be paid by the policyholder.
C. The premium for all policyholders in good health.
D. The premium required to meet claims each year including an assumed interest rate of 5%.

Answer 10

A

Question 11

Carla is placing a life assurance policy into trust. She should be aware that the trustees
A. will ideally be older than Carla.
B. should have an understanding of her wishes.
C. cannot include Carla.
D. must be related to Carla.

Answer 11

B

Question 12

Craig has had a life assurance policy assigned to him. By when should he notify the life office of the assignment?

A. Within 30 days of the date of the assignment.
B. As soon as possible.
C. At any time before making a claim.
D. By the end of the month in which the assignment took place.

Answer 12

B

Question 13

Jack, who is married to Vera, has an endowment policy approaching maturity. The life office’s form of discharge can be signed by
A. Jack or his solicitor.
B. Jack or Vera.
C. Jack or anyone appointed by him.
D. Jack only.

Answer 13

D

Question 14

Shona has been advised to take out an increasing term assurance as protection for her dependants. The reason for this would be to ensure the

A. sum assured keeps pace with inflation.
B. premium increases are in line with salary increases each year.
C. original sum assured can be maintained over the term of the policy.
D. premiums and the sum assured rise in line with interest rates.

Answer 14

A

Question 15

Julie has decided to pay the premiums on her life assurance policy by monthly instalments. This means that the premium she pays will have a

A. handling fee.
B. frequency loading.
C. net premium adjustment.
D. natural premium reduction.

Answer 15

B

Question 16

Where a claim is made under a mortgaged life policy, who will the life office make the payment to?

A. The policyholder.
B. The mortgagee.
C. The mortgagor.
D. The life assured.

Answer 16

B

Question 17

Who is responsible for declaring a chargeable gain on a life policy to HMRC?
A. One of the policyholders and the life office jointly.
B. A policyholder or other liable person.
C. The life office only.
D. There is no need for it to be declared.

Answer 17

B

Question 18

Helen has made a chargeable gain of £4,500 on the surrender of her non-qualifying life assurance policy. If her taxable income in 2024/25 is £40,000 she will be liable for what tax on the gain?

A. Capital gains tax at 10%.
B. Capital gains tax at 20%.
C. Income tax at an extra 20%.
D. Income tax at an extra 40%.

Answer 18

C

Question 19

John is paying regular monthly premiums on a life assurance policy to protect a potential inheritance tax liability. Which exemption from inheritance tax could he claim against the annual premiums totalling £3,200?

A. The annual exemption and/or the normal expenditure out of income.
B. The annual exemption only.
C. The small gifts exemption.
D. The life assurance premium exemption.

Answer 19

A

Question 20

Frances has made a claim on the maturity of a second-hand life assurance policy and made a chargeable gain. Which tax(es) will she potentially be liable for?
A. Income tax.
B. Income tax and capital gains tax.
C. Capital gains tax.
D. Income tax or capital gains tax depending on the amount of the gain.

Answer 20

C

Question 21

Andrew died in May 2024, leaving £81,250 to his niece and the remaining £285,000 to his wife Mary. Andrew and Mary do not own their own property. Mary’s estate is to be left to their niece. If Mary’s estate is now worth £590,000 and she wants to take out a policy to cover the inheritance tax liability on this, she should take out a policy for what amount?

A. £8,500
B. £21,250
C. £73,500
D. £106,000

Answer 21

A

Question 22

The life fund of a UK insurer is liable for tax on capital gains at what rate?
A. 17%.
B. 18%.
C. 19%.
D. 20%.

Answer 22

D

Question 23

Kevin is employed and receives sick pay from his employer. This is paid at full pay for six months and then half pay for a further six months. In arranging an income protection policy, he will be able to take out cover based on
A. half pay for months 7 - 12 and full pay from month 13.
B. half pay from month 7 only.
C. full pay from month 13 only.
D. full pay from the start of the policy only.

Answer 23

A

Question 24

The usual limitation on the amount of benefit that can be paid from an individual income protection policy is that the total of all policies does NOT exceed

A. 50% of monthly gross earnings in the two years prior to incapacity.
B. 50% - 60% of average monthly gross earnings in the year prior to incapacity.
C. 75% - 80% of average monthly gross earnings in the year prior to incapacity.
D. 50% - 65% of monthly gross earnings in the six months prior to incapacity

Answer 24

B

Question 25

Jennifer, who works in the hotel and catering industry as a housekeeper, is applying for an income protection policy. In which occupational class will she be placed for the calculation of her premium rate? A. Class 1 B. Class 2 C. Class 3 D. Class 4

Answer 25

B

Question 26

Daniel’s company provides income protection for him, and they pay the premiums. For how long will the benefits usually be paid if he becomes ill? A. A maximum period of 2 years. B. To the earliest of his recovery, leaving service or normal retirement date. C. For a period chosen by the company. D. For a period of between 2 and 6 years depending on the nature of Daniel’s incapacity.

Answer 26

B

Question 27

Aisling has started a new occupation on a part-time basis, three years after taking out her income protection policy. How will this change be treated by most providers? A. Her benefits will always be reduced. B. Her premiums will always be reduced. C. The cover will cease due to non-disclosure. D. The benefits will only be paid in relation to her new job.

Answer 27

D

Question 28

Sean has an income protection policy with a deferred period of 13 weeks. When should he notify the insurance company in the event that he becomes incapacitated and needs to make a claim? A. As soon as possible. B. After 13 weeks. C. 4 weeks before the end of the deferred period. D. No later than 30 days after his incapacity starts.

Answer 28

A

Question 29

Amanda has a term assurance policy that includes Waiver of Premium (WOP). For how long will the waiver of premiums continue when a valid claim is made? A. For a maximum of 2 years. B. Until she returns to work, the expiry of the policy or a specified age. C. Until she returns to work. D. For a period of between 2 and 5 years depending on the reason for her claim.

Answer 29

B

Question 30

Neil’s critical illness policy has been set up on a reviewable basis. What is the new rate based on when the reviews are undertaken? A. The policyholder’s health. B. The policyholder’s age. C. Claims’ experience of the insurer. D. Changes in the amount of claims made within the industry.

Answer 30

C

Question 31

Emily, a higher rate taxpayer, has received the benefits from her critical illness policy after making a valid claim. The benefits she receives will be liable for A. income Tax at 40%. B. capital Gains Tax at 24%. C. income Tax at 20%. D. no tax of any nature

Answer 31

D

Question 32

Where a combined life assurance and critical illness policy allows for buy back of the sum assured on death after the payment of benefits on a critical illness claim, this is typically allowed after what period of time has passed? A. Two years from the date of the critical illness claim. B. 18 months from the date of diagnosis of the critical illness. C. One year from the payment of the critical illness benefit. D. Six months from the end of any treatment for the diagnosed critical illness.

Answer 32

A

Question 33

Although no set survival period is specified in the ABI best practice, what is the typical range of survival periods for critical illness cover on the market? A. 7 – 14 days. B. 10 – 14 days. C. 14 – 21 days. D. 14 – 30 days.

Answer 33

D

Question 34

Under total and permanent disability, the strictest definition in terms of when a critical illness cover would pay out, is that the client would be unable to A. work in a suited occupation ever again. B. look after themselves ever again. C. do their own occupation ever again. D. complete three specified work tasks ever again.

Answer 34

B

Question 35

Maja is looking at taking out a critical illness insurance policy. She would be aware that this type of policy would not usually cover A. heart valve replacement. B. major organ transplant. C. temporary loss of speech. D. Alzheimer’s disease before age 60.

Answer 35

C

Question 36

Before taking out a long-term care policy, the potential policyholder should carefully examine the A. underwriting requirements. B. charges included in the premium. C. maximum level of benefits available. D. number of activities of daily living (ADLs) used to assess the need for care.

Answer 36

D

Question 37

The main types of long-term care available would not include A. Family care. B. Care in a care home. C. Care provided by a registered charity. D. Care at home.

Answer 37

C

Question 38

A client who is in poor health and already needs care will most likely benefit from what type of policy? A. Immediate needs plan. B. Pre funded policies. C. Deferred care plan. D. Traditional insurances.

Answer 38

A

Question 39

Belinda, a single parent, has 2 children aged 8 and 10, has taken out a personal accident and sickness policy for herself. If she wanted to extend the cover of the policy to cover her children, what restriction might there be? A. The lump sums payable on the events covered will be half the amount paid to her. B. The cover may be restricted to accidents only. C. The cover may exclude permanent disablement. D. The children can only be covered if they live with her permanently.

Answer 39

B

Question 40

Avril wants a low-cost policy that will help to pay for any medical care she requires. A disadvantage of a basic private medical insurance plan rather than a comprehensive policy is A. the cost of drugs required in treatment is not covered. B. treatment relating to substance abuse is unlikely to be covered. C. normal pregnancy will not be covered. D. there may be fairly low limits on the cost of treatment covered in one year.

Answer 40

D

Question 41

Jack is looking at taking out a mortgage payment protection insurance policy. He should be aware that A. the cost of this cover tends to be relatively high compared to the benefit. B. benefits are usually payable for up to 60 months only. C. the premium will form part of his monthly mortgage payment. D. it covers the same risks as income protection insurance.

Answer 41

A

Question 42

An accident, sickness and unemployment insurance policy may also pay a A. lump sum benefit for total and permanent disability. B. daily amount for each day spent in hospital. C. lump sum benefit for loss of a limb or sight. D. weekly amount for each week requiring home nursing care.

Answer 42

C

Question 43

Systemis Ltd pays the premiums for a group personal accident and sickness insurance for their employees. How is this treated in relation to the company’s taxation? A. There is no tax advantage for the company. B. They receive tax relief at 20% on the premiums paid. C. The cost is deducted from their tax liability. D. It is treated as an allowable business expense.

Answer 43

D

Question 44

Vivienne wants to apply for a mortgage payment protection insurance policy. A typical eligibility condition is that she must A. be aged between 21 and 60. B. have been employed/self-employed continuously for the last 6 months. C. be currently working for at least 30 hours per week. D. not have any pre-existing medical conditions.

Answer 44

B

Question 45

In quantifying the protection needs of a client on death, the first consideration should be A. Capital to make lifestyle changes. B. Income for dependants in the long-term. C. Capital to settle liabilities. D. Income for dependants in the short-term.

Answer 45

C

Question 46

James has completed a sales process with a client and sold a protection product. To meet the FCA rules he should keep copies of the A. fact-find, written recommendations and suitability letters. B. fact-find. C. fact-find and suitability letters. D. fact-find, product application forms and suitability letters.

Answer 46

A

Question 47

Tax relief can generally be given on premiums for a key person policy where the life assured is classed as A. a shareholding director. B. a partner. C. a sole trader. D. an employee.

Answer 47

D

Question 48

Where policies are written on a life of another basis in relation to share protection insurance, the main advantage is that A. policies will be cheaper. B. no trusts are required. C. tax relief will be available on the premiums. D. there is no underwriting involved.

Answer 48

B

Question 49

Caledon Ltd has an agreed overdraft facility with their bank of £50,000. They have only ever used £20,000 of it occasionally to cover short term cash flow problems. In considering the insurance cover, they should have on this, the cover should be for A. £20,000 B. the average amount used over the last 5 years. C. £50,000 D. an amount agreed with their bank.

Answer 49

C

Question 50

DDB Ltd has made a claim on a company held life policy. How is this treated in relation to taxation? A. It is free from liability for tax because the policy was owned by the company. B. The profit is treated as income of the company and subject to corporation tax. C. The profit is treated as income of the company and subject to income tax. D. It is treated as a capital gain and subject to income tax.

Answer 50

B